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Incorporating sole proprietorship firms

The proprietor has the ultimate authority and responsibility of taking every business decision and is ultimately the sole recipient of any profits/loss the business accrues.

, ET Online|
Last Updated: Aug 08, 2017, 11.44 AM IST
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Self Declaration before a Notary Public through an Affidavit can be a good option, if your banker is convinced by the same.
Self Declaration before a Notary Public through an Affidavit can be a good option, if your banker is convinced by the same.
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Sole proprietorship is a form of business organization owned and managed by one person. The proprietor has the ultimate authority and responsibility of taking every business decision and is ultimately the sole recipient of any profits/loss the business accrues.

Sole proprietorship firms in India are not regulated under any one law to protect the interest of individual proprietors and therefore, this type of business organization is the simplest one in terms of registration and compliances. With introduction of One-person Company in Companies Act, 2013, the legislature has taken up a step towards regularizing and protecting the interest of entrepreneurs who wish to do business solely.

Often called the sole trader or a proprietor, and there is no formal procedure set under the law that can bring it into existence. A sole proprietor business is considered as an extension of the person conducting the business, which means it is often difficult to provide a legally valid proof of its existence. However, there are different sections in law that can be applied to a sole proprietor business and registering under them can give valid proof of existence. Such provisions exist under the ambit of:

1. Obtaining Shop & Establishment Certificate
2. Goods and Services Tax Identification Number
3. Small Scale Industries Registration
4. Importer-Exporter Code - With launch of GST, only GSTIN will be used for purpose of import and exports. In case of persons not liable to be registered under GST, PAN number will be used instead of IEC.
5. Intellectual Property Rights Registration
6. Opening a Current Bank Account
Some other unconventional options include -
7. Self Declaration before a Notary Public through an Affidavit if your banker is convinced by the same.
8. Recommendation letter from a local MLA/MP/Gazetted Officer in this behalf, again if accepted by your bankers.

In this section, we will cover registration process of all the above mentioned options. Also, with implementation of Goods and Service Tax (GST) that will subsume Excise, VAT and Service Tax amongst other indirect taxes, we have dedicated a section explaining how the entire transition process.
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